How do you calculate average assets?

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Quick Answer

Calculating a company's total average assets is the process of adding the total assets a company has at the end of the current year to the total assets the company has at the end of the previous year and then dividing this sum by two. Companies can also choose to use this formula with the total asset figures from at the end of 2 months rather than 2 years.

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Calculating a company's total average assets can be helpful for comparing how efficiently a company uses its assets to support its sales. If a company has high sales and a low amount of assets, then this shows it's being efficient. Some types of assets companies have include cash, land, supplies, buildings, vehicles and inventory.